KENANGA GLOBAL OPPORTUNITIES FUND

Transcription

1 Kenanga Investors Berhad ( P) KENANGA GLOBAL OPPORTUNITIES FUND INTERIM REPORT For the Financial Period from 1 March 2015 to 31 August 2015

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3 KENANGA GLOBAL OPPORTUNITIES FUND Contents Page Corporate Directory ii Directory of Manager s Offices iii Fund Information 1 Manager s Report 2-4 Fund Performance 5-7 Trustee s Report 8 Statement by the Manager 9 Financial Statement 10-27

4 CORPORATE DIRECTORY Manager: Kenanga Investors Berhad (Company No P) Registered Office Kenanga Investors Berhad (KIB) 8th Floor, Kenanga International, Jalan Sultan Ismail, Kuala Lumpur, Malaysia. Tel: Fax: Business Office Suite 12.02, 12th Floor, Kenanga International, Jalan Sultan Ismail, Kuala Lumpur, Malaysia. Tel: Fax: Website: Board Of Directors Datuk Syed Ahmad Alwee Alsree (Chairman) Syed Zafilen Syed Alwee (Independent Director) Peter John Rayner (Independent Director) Imran Devindran bin Abdullah (Independent Director) Dato Bruce Kho Yaw Huat Ismitz Matthew De Alwis Investment Committee Dato Bruce Kho Yaw Huat (Chairman) Syed Zafilen Syed Alwee (Independent Member) Peter John Rayner (Independent Member) Imran Devindran bin Abdullah (Independent Member) Ismitz Matthew De Alwis Company Secretary: Norliza Abd Samad (MAICSA ) 9th Floor, Kenanga International, Jalan Sultan Ismail, Kuala Lumpur, Malaysia. Tel: Fax: Trustee: CIMB Commerce Trustee Berhad (Company No A) Registered Office Level 13, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral Kuala Lumpur. Tel: Fax: Website: Business Office Level 21, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral Kuala Lumpur. Tel: Fax: Auditor: Ernst & Young (AF: 0039) Level 23A, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Kuala Lumpur. Tel: Fax: Tax Adviser: Ernst & Young Tax Consultants Sdn Bhd (Company No K) Level 23A, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Kuala Lumpur. Tel: Fax: Membership: Federation Of Investment Managers Malaysia (FIMM) , 6th Floor, Wisma Tune, 19, Lorong Dungun, Damansara Heights, Kuala Lumpur, Malaysia. Tel: Fax: Website: Kenanga Global Opportunities Fund Interim Report ii

5 DIRECTORY OF MANAGER S OFFICES Regional Branch Offices : Kuala Lumpur Suite 12.02, 12th Floor, Kenanga International Jalan Sultan Ismail, Kuala Lumpur, Malaysia Tel: Fax: Melaka No. 25-1, Jalan Kota Laksamana 2/17, Taman Kota Laksamana, Seksyen 2, Melaka Tel: / Fax: Klang No. 12, Jalan Batai Laut 3, Taman Intan, Klang, Selangor Darul Ehsan Tel: / Fax: Penang 16th Floor, Menara Boustead Penang, 39, Jalan Sultan Ahmad Shah, Penang Tel : Fax : Seremban 2nd Floor, No. 1D-2, Jalan Tuanku Munawir, Seremban, Negeri Sembilan Tel : Fax : Johor Bahru Lot 11.03, 11th Floor, Menara MSC Cyberport, 5, Jalan Bukit Meldrum, Johor Bahru, Johor Tel: /4798 Fax: Kuching 1st Floor, No 71, Lot 7, Lot 10900, Jalan Tun Jugah, Kuching, Sarawak Tel: Fax: Kota Kinabalu A-03-11, 3rd Floor, Block A, Warisan Square, Jalan Tun Fuad Stephens, Kota Kinabalu, Sabah Tel: / Fax: Ipoh Suite 1, 2nd Floor, 63, Persiaran Greenhill, Ipoh, Perak Tel: / 7570 Fax: Miri 2nd Floor, Lot 1264, Centre Point Commercial Centre, Jalan Melayu, Miri, Sarawak Tel: Fax: Kenanga Global Opportunities Fund Interim Report iii

6 1. FUND INFOATION 1.1 Fund Name Kenanga Global Opportunities Fund (KGOPF or the Fund) 1.2 Fund Category / Type Feeder / Growth 1.3 Investment Objective The Fund aims to achieve capital growth by investing, via a target fund, in a diversified portfolio of global equities that are likely to yield higher earnings growth than the global average. 1.4 Investment Strategy The Fund will invest a minimum of 95% of its NAV in NN (L) Global Equity Opportunities (formerly known as ING (L) Invest Global Opportunities) denominated in Euro, domiciled in Luxembourg. The remaining will be invested in liquid assets including money market instruments and deposits with licensed financial institutions. 1.5 Duration The Fund was launched on 21 June 2010 and it shall exist as long as it appears to the Manager and the Trustee that it is in the interests of the unitholders for it to continue. 1.6 Performance Benchmark MSCI World AC Index 1.7 Distribution Policy Income (if any) will be distributed annually on the best effort basis. 1.8 Breakdown of unit holdings of KGOPF as at 31 August 2015 Size of holdings No. of unitholders No. of units held 5,000 and below 0 0 5,001-10, ,399 10,001-50, ,425 50, , , ,001 and above 2 2,363,990 Total 16 2,773,155 Kenanga Global Opportunities Fund Interim Report 1

7 2. MANAGER S REPORT 2.1 Explanation on whether the Fund has achieved its investment objective. For the financial period under review, the Fund fulfilled its investment objective, having invested in NN (L) Global Equity Opportunities ( Target Fund ) with a diversified portfolio of global equities that are likely to yield higher earnings growth than the global average. 2.2 Comparison between the Fund s performance and performance of the benchmark Performance Chart Since Launch (21/06/ /08/2015) Kenanga Global Opportunities Fund vs MSCI World AC Index Source: Lipper 2.3 Investment strategies and policies employed during the financial year under review For the financial period under review, the Fund s investment strategy and policy is to continue invest nearly all its assets into the Target Fund and the remaining in liquid assets. The strategy employed was in-line with that disclosed in the prospectus. 2.4 The Fund's asset allocation (% of NAV) as at 31 August 2015 and comparison with the previous financial period Asset 31 Aug Aug 2014 Collective investment scheme - foreign 96.4% 95.7% Short term deposits and cash 3.6% 4.3% Reason for the differences in asset allocation There was not much difference in the asset allocation of the fund. Kenanga Global Opportunities Fund Interim Report 2

8 2.5 Fund performance analysis based on NAV per unit (adjusted for income distribution) since last review period Financial year under review Kenanga Global Dividend Fund 6.14% MSCI World AC Index 6.91% Source: Lipper During the financial period under review, the Fund registered a positive return of 6.14% which underperformed its benchmark which registered positive returned of 6.91%. The underperformance was due to the underperformance of the Target Fund. 2.6 Review of the market that NN (L) Global Equity Opportunities (Target Fund) invests in Market Review Global equities declined 9.2% in US dollar terms over the six-month reporting period, as signs of a worse-than-expected slowdown in China sparked a sell-off in global equity markets. Investors also worried about the negative impact of potential Fed rate hikes on a vulnerable global economy. The anxiety for a Chinese slowdown was most felt in emerging markets (18.2%) with currencies falling sharply across the region. In developed markets US stocks fell 8.3%, Japan declined 7.2% while Europe dropped 9.4%. The best performing sectors during the period were Health Care, Telecommunication Services and Consumer Discretionary. Not surprisingly, the commodity-related Energy and Materials sectors were the worst performers. In terms of style, Growth stocks outperformed Value stocks by 3.1% and large caps underperformed small caps by2.1%. In Europe, the period began with the ECB starting its 60B asset-buying programme, a commitment to buy assets, including sovereign bonds, at a rate of 60bn per month until at least September Grexit became a real possibility again and markets were volatile, especially after a national referendum was held to accept the terms of a new debt bailout. In the end, the Greek people voted for the terms of the bailout and eventually a deal was agreed between Prime Minister Tsipras and Greece s European creditors. On the macro front, Eurozone PMI data improved while GDP grew by 1.5% in Q2. Q2 Corporate results in Europe were strong with close to 8% earnings growth despite a weak oil & gas sector. The US economy contracted in Q1 by 0.2% but grew by 3.9% in Q2. Much of the weaker economic activity in Q1 was attributed to adverse weather. The labour market continued to improve with unemployment falling from 5.7% to 5.1%. The Fed appeared to pave the way for rate hikes after removing the word patience from its policy statement but refrained from pulling the trigger. Looking at Q2 earnings, US corporates fared less well than their European counterparts as earnings growth fell 2.1%. Earnings surprise was still positive though, with almost 75% of the S&P 500 stocks beating expectations. In Asia, Chinese stocks recorded extraordinary gains in the first half of the period on speculation of stimulus and easing measures. The rise was, however, short-lived as fears of a stock market bubble quickly turned to a rout. The sell-off caught a second wind after the PBOC s surprise decision to devalue the yuan. Earnings growth in Japan was much stronger than other developed markets and there was more evidence of improving corporate behaviour. However, this didn t give Japanese stocks immunity to the market turmoil caused by the yuan s devaluation. There was, though, a noticeable halt to the downward trend of the Japanese yen after the currency once again became a safe haven for worried investors. Kenanga Global Opportunities Fund Interim Report 3

9 2.6 Review of the market that NN (L) Global Equity Opportunities (Target Fund) invests in (Contd.) Market Outlook Central bank policies start to diverge which brings opportunities for equity investors. The FED is no longer flooding the market with liquidity while Europe and Japan are. Consensus expects the FED to raise rates in This is resulting in a relatively stronger US dollar. The stronger US dollar is a negative for US equities as approximately 46% of S&P 500 revenues come from offshore. US equities have undergone a significant multiple re-rating but are a relatively clean investment compared to Europe. The weakness in China and the rest of emerging markets opens up opportunities as the valuations of a lot of companies have dropped considerably. In our opinion though, longer-term structural trends are the most important factors that determine the success of companies going forward. In that respect it is very hopeful to see that the Japanese government is pushing true a number of structural reforms next to the massive quantitative easing that the Bank of Japan is pursuing. This is very beneficial for our Japanese asset inflation theme. Both India and Indonesia are pushing through real reforms to invigorate growth. This will take time however. China is pursuing its crack-down on corruption and presses ahead with his economic reform agenda. Although the first is hurting economic activity in some sectors in the short term, we think it will strengthen the Chinese economy in the longer term. In all these countries we see structural trends that benefit the consumers. We therefore believe that these equity markets offer attractive investment opportunities. Source: NN Investment Partners 2.7 Income Distribution For the financial period under review, the Fund did not declare any income distribution. 2.8 Details of any unit split exercise The Fund did not carry out any unit split exercise during the financial period under review. 2.9 Significant changes in the state of affair of the Fund during the financial period There were no significant changes in the state of affair of the Fund during the financial period and up until the date of the manager s report, not otherwise disclosed in the financial statements Circumstances that materially affect any interests of the unitholders During the financial period under review, there are no circumstances that materially affect any interests of the unitholders Rebates & Soft commissions Any rebates received are channelled back to the Fund. On the other hand, soft commissions received from the stockbrokers for goods and services such as technical analysis software, fundamental database, financial wire services, stock quotation system and portfolio management software incidental to investment management of the Fund shall be retained by the Manager. For the financial period under review, the Manager did not receive any rebates or soft commissions from stockbrokers. Kenanga Global Opportunities Fund Interim Report 4

10 3. FUND PERFOANCE 3.1 Details of portfolio composition of Kenanga Global Opportunities Fund ( the Fund ) for the financial period as at 31 August 2015 against last 3 financial years 28/29 February are as follows: a. Distribution among category of investments: As at FY FY FY % % % % Collective investment scheme - foreign Short term deposits and cash Note: The above mentioned percentages are based on total net asset value of the Fund. b. Distribution among markets As at 31 August 2015, the target fund NN (L) Global Equity Opportunities has invested in the following markets: Source: NN Investment Partners c. Distribution among industry sectors As at 31 August 2015, the target fund NN (L) Global Equity Opportunities has invested in the following industry sectors. Source: NN Investment Partners Kenanga Global Opportunities Fund Interim Report 5

11 3.2 Performance details of the Fund for the financial period ended 31 August 2015 against last 3 financial period/years ended 28/29 February are as follows: Period to FY 2015 FY 2014 FY 2013 Net asset value ("NAV") ( Million) 1.54* Units in circulation (Million) NAV per unit () * Highest NAV per unit () Lowest NAV per unit () Total return (%) Capital growth (%) Income growth (%) Gross distribution per unit (sen) Net distribution per unit (sen) Management expense ratio ( MER ) (%) Portfolio turnover ratio ( PTR ) (times) Note: Total return is the actual return of the Fund for the respective financial period/years, computed based on NAV per unit and net of all fees. MER is computed based on the total fees and expenses incurred by the Fund divided by the average fund size calculated on a daily basis. PTR is computed based on the average of the total acquisitions and total disposals of investment securities of the Fund divided by the average fund size calculated on a daily basis. Above NAV and NAV per unit are not shown as ex-distribution as there were no distribution declared by the Fund in the current financial period under review. 1 MER is lower against previous financial year as the computation is in respect of 6 months only. 2 PTR is lower against previous financial years as the computation is in respect of 6 months only. * The NAV and NAV per unit are valued based on bid price fair valuation method. Kenanga Global Opportunities Fund Interim Report 6

12 3.3 Average total return of the Fund 1 Year 3 Years 5 Years 31 Aug Aug Aug Aug Aug Aug 15 Kenanga Global Opportunities Fund -3.28% 3.17% 2.98% MSCI World AC Index 22.50% 21.85% 18.05% Source: Lipper 3.4 Annual total return of the Fund Kenanga Global Opportunities Fund MSCI World AC Index Source: Lipper Period under review 1 year 1 year 1 Year 1 Year 28 Feb Aug Feb Feb Feb Feb Feb Feb Feb Feb 12 Since Inceptio n 21 June Feb % % 8.19% 4.74% -8.76% 13.20% 6.91% 15.99% 22.68% 10.17% -5.48% 14.47% Investors are reminded that past performance is not necessarily indicative of future performance. Unit prices and investment returns may fluctuate. Kenanga Global Opportunities Fund Interim Report 7

13 4 TRUSTEE S REPORT TO THE UNITHOLDERS OF KENANGA GLOBAL OPPORTUNITIES FUND We, CIMB COMMERCE TRUSTEE BERHAD ( the Trustee ), being the Trustee of KENANGA GLOBAL OPPORTUNITIES FUND ( the Fund ) are of the opinion that KENANGA INVESTORS BERHAD ( the Manager ), acting in the capacity of Manager of the Fund, has fulfilled its duties in the following manner for the financial period ended 31 August a) The Fund has been managed in accordance with the limitations imposed on the investment powers of the Manager and the Trustee under the Deed, the Securities Commission Malaysia s Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 (as amended from time to time) and other applicable laws; b) Valuation/pricing of units of the Fund has been carried out in accordance with the Deed and relevant regulatory requirements; and c) Creation and cancellation of units have been carried out in accordance with the Deed and relevant regulatory requirements. For and on behalf of CIMB COMMERCE TRUSTEE BERHAD ( A) LEE KOOI YOKE Chief Operating Officer Kuala Lumpur, Malaysia 23 October 2015 Kenanga Global Opportunities Fund Interim Report 8

14 5. STATEMENT BY THE MANAGER We, Ismitz Matthew De Alwis and Dato' Bruce Kho Yaw Huat, being the directors of Kenanga Investors Berhad, do hereby state that, in the opinion of the Manager, the accompanying statement of financial position as at 31 August 2015 and the related statement of comprehensive income, statement of changes in net asset value and statement of cash flows for the financial period from 1 March 2015 to 31 August 2015 together with notes thereto, are drawn up in accordance with Financial Reporting Standards in Malaysia so as to give a true and fair view of the financial position of Kenanga Global Opportunities Fund as at 31 August 2015 and of it financial performance and cash flows for the period from 1 March 2015 to 31 August 2015 and comply with the requirements of the Deed. For and on behalf of the Manager Kenanga Investors Berhad Ismitz Matthew De Alwis Dato' Bruce Kho Yaw Huat Kuala Lumpur, Malaysia 23 October 2015 Kenanga Global Opportunities Fund Interim Report 9

15 6. FINANCIAL STATEMENT 6.1 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD FROM 1 MARCH 2015 TO 31 AUGUST 2015 (unaudited) Note to to INVESTMENT INCOME Interest income Net gain from investments: - Financial assets at fair value through profit or loss ( FVTPL ) 4 80,298 4,146 80,503 4,185 EXPENSES Manager s fee 5 1,876 1,218 Trustee s fee 6 4,488 8,261 Auditors remuneration 2,244 2,414 Tax agent s fee 1,945 1,400 Administration expenses 1,184 3,176 11,737 16,469 NET INCOME/(LOSS) BEFORE TAX 68,766 (12,284) Income tax NET INCOME/(LOSS) AFTER TAX, REPRESENTING TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD 68,766 (12,284) Net income/(loss) after tax is made up as follows: Realised loss (9,424) (12,323) Unrealised gain 4 78, ,766 (12,284) The accompanying notes form an integral part of the financial statements. Kenanga Global Opportunities Fund Interim Report 10

16 6.2 STATEMENT OF FINANCIAL POSITION AS AT 31 AUGUST 2015 (unaudited) Note INVESTMENT Financial assets at FVTPL 4 1,489, ,669 OTHER ASSET Cash at bank 70,288 42,803 TOTAL ASSETS 1,559, ,472 LIABILITIES Amount due to Manager Amount due to Trustee 1,455 2,244 Other payables 8 13,332 14,037 TOTAL LIABILITIES 15,216 16,456 EQUITY Unitholders contribution 1,554, ,622 Accumulated losses (10,623) (42,606) NET ASSET VALUE ( NAV ) ATTRIBUTABLE TO UNITHOLDERS 9 1,544, ,016 TOTAL EQUITY AND LIABILITIES 1,559, ,472 NUMBER OF UNITS IN CIRCULATION 9(a) 2,773,154 1,071,761 NET ASSET VALUE PER UNIT () The accompanying notes form an integral part of the financial statements. Kenanga Global Opportunities Fund Interim Report 11

17 6.3 STATEMENT OF CHANGES IN NET ASSET VALUE FOR THE FINANCIAL PERIOD FROM 1 MARCH 2015 TO 31 AUGUST 2015 (unaudited) Note Unitholders Accumulated contribution losses Total NAV to At beginning of the period 536,766 (79,389) 457,377 Total comprehensive income - 68,766 68,766 Creation of units 9(a) 1,059,138-1,059,138 Cancellation of units 9(a) (41,269) - (41,269) Distribution equalisation 9(a) At end of the period 1,554,818 (10,623) 1,544, to At beginning of the period 1,175,626 (30,322) 1,145,304 Total comprehensive loss - (12,284) (12,284) Creation of units 9(a) 15,892-15,892 Cancellation of units 9(a) (531,896) - (531,896) Distribution equalisation 9(a) At end of the period 659,622 (42,606) 617,016 The accompanying notes form an integral part of the financial statements. Kenanga Global Opportunities Fund Interim Report 12

18 6.4 STATEMENT OF CASH FLOWS FOR THE FINANCIAL PERIOD FROM 1 MARCH 2015 TO 31 AUGUST 2015 (unaudited) to to CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES Proceeds from sale of financial asset at FVTPL 63, ,000 Purchase of financial assets at FVTPL (1,030,000) (80,000) Interest received Manager s fee paid (1,564) (1,809) Trustee s fee paid (3,699) (8,927) Auditors remuneration paid (4,500) (4,500) Tax agent s fee paid - (2,900) Payment for other fees and expenses (2,241) (1,503) Net cash (used in)/generated from operating and investing activities (978,798) 499,401 CASH FLOWS FROM FINANCING ACTIVITIES Cash received from units created 1,059,324 15,891 Cash paid on units cancelled (41,272) (531,896) Net cash generated from/(used in) financing activities 1,018,052 (516,005) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 39,254 (16,604) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 31,034 59,407 CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 70,288 42,803 Cash and cash equivalents comprise: Cash at bank 70,288 42,803 The accompanying notes form an integral part of the financial statements. Kenanga Global Opportunities Fund Interim Report 13

19 6.5 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 1 MARCH 2015 TO 31 AUGUST 2015 (unaudited) 1. THE FUND, THE MANAGER AND THEIR PRINCIPAL ACTIVITIES Kenanga Global Dividend Fund (the Fund ) was constituted pursuant to the executed Deed dated 13 October 2009 (collectively, together with deeds supplemental thereto, referred to as the Deed ) between the Manager, Kenanga Funds Berhad, and CIMB Commerce Trustee Berhad ("the Trustee"). The Fund commenced operations on 21 June 2010 and will continue to be in operation until terminated as provided under Part 12 of the Deed. Pursuant to the executed First Supplemental Deed dated 15 May 2013 between Kenanga Investors Berhad and CIMB Commerce Trustee Berhad, Kenanga Investors Berhad was appointed as the Manager of the Fund with effect from 8 June Kenanga Investors Berhad is a wholly-owned subsidiary of Kenanga Investment Bank Berhad, which in turn is a wholly-owned subsidiary of K & N Kenanga Holdings Berhad that is listed on the Main Board of Bursa Malaysia Securities Berhad. All of these companies are incorporated in Malaysia. The principal place of business of the Manager is Suite 12.02, 12th Floor, Kenanga International, Jalan Sultan Ismail, Kuala Lumpur. The Fund aims to achieve capital growth by investing, via a target fund, in a diversified portfolio of global equities that are likely to yield higher earning growth than the global average. To achieve the objective of the Fund, it will invest a minimum 95% of its NAV in NN (L) Global Equity Opportunities (formerly known as ING (L) Invest Global Opportunities) ( NNGEO ) that is managed by NN Investment Partners Luxembourg S.A. (formerly known as ING Investment Management Luxembourg S.A. ("NNIP") denominated in Euro ( EUR ), domiciled in Luxembourg. The remaining will be invested in liquid assets including money market instruments and deposits with licensed financial institution. NNGEO invests in a diversified portfolio of securities issued by companies established, listed or traded in various countries worldwide and offering an attractive dividend yield. The unaudited financial statements were authorised for issue by the Chief Executive Officer of the Manager on 23 October FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES To the extent the Fund invests in NNGEO, which has investment in global equities, it is exposed to market risk (which includes interest risk, price risk and currency risk), credit risk and liquidity risk. The Manager monitors the portfolio of NNGEO to ensure that the underlying fund is positioned to meet its investment objectives. The Manager may seek alternative collective investment schemes or any permissible instruments that are consistent with the objective of the Fund. a. Market Risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk includes interest rate risk, price risk and currency risk. Market risk arises when the value of the financial instruments fluctuate in response to the activities of individual companies, general market or economic conditions. It stems from the fact that there are other economy-wide perils, which threaten all businesses. Hence, investors are exposed to market uncertainties. Fluctuation in the investment prices caused by uncertainties in the economy, political and social environment will affect the NAV of the Fund. Kenanga Global Opportunities Fund Interim Report 14

20 2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market Risk (Contd.) i. Interest rate risk The Fund has minimal exposure to interest rate risk as placements with licensed financial institutions are short term in nature and have fixed interest rates. In addition, the Fund has indirect exposure to interest rate risk through NNGEO. ii. Price risk Price risk is the risk of unfavourable changes in the NAV of foreign collective investment scheme. The Funds invests in a foreign collective investment scheme which is exposed to price fluctuations. This may then affect the NAV per unit of the Fund. Price risk sensitivity The Manager s best estimate of the effect on the profit for the financial period due to a reasonably possible change in investments in foreign collective investment scheme, with all other variables held constant is indicated in the table below: Changes in price Increase/ (Decrease) Basis points Effect on profit for the period Increase/ (Decrease) Collective investment scheme foreign 5/(5) 745/(745) Collective investment scheme foreign 5/(5) 295/(295) In practice, the actual trading results may differ from the sensitivity analysis above and the difference could be material. Price risk concentration The following table sets out the Fund s exposure and concentration to price risk based on its portfolio of financial instruments as at the reporting date. Fair value Percentage of NAV % % Collective investment scheme - foreign 1,489, , iii. Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Kenanga Global Opportunities Fund Interim Report 15

21 2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) a. Market Risk (Contd.) iii. Currency risk (Contd.) When the foreign currencies fluctuate in an unfavorable movement against Ringgit, the investment face currency loss in addition to capital gain/(loss). This will lead to lower NAV of the Fund. The Fund invests a minimum 95% in NNGEO, denominated in EUR, domiciled in Luxembourg. The Manager may consider managing the currency risk using currency hedging. However, this would be subject to the current market outlook on the currency exposure risk as well. Currency risk sensitivity The Fund did not have any financial liabilities denominated in foreign currencies as at the reporting date. The following table indicates the currencies to which the Fund had significant exposure at the reporting date on its financial assets. The analysis calculates the effect of a reasonably possible movement of the currency rate against Ringgit Malaysia on profit with all other variables held constant. Change in currency rate Increase/(Decrease) Basis points Effect on profit for the period Increase/(Decrease) EUR/ 5/(5) 745/(745) EUR/ 5/(5) 295/(295) In practice, the actual trading results may differ from the sensitivity analysis above and the difference could be material. Currency risk concentration The following table sets out the Fund s exposure to foreign currency exchange rates on its financial assets as at the reporting date. b. Credit Risk Fair value Percentage of NAV % % EUR 1,489, , Prior to investing in NNGEO, the Manager has performed an evaluation of the performance and track record of NNGEO, as well as the fund management team of NNGEO. i. Credit risk exposure As at the reporting date, the Fund s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position. Kenanga Global Opportunities Fund Interim Report 16

22 2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) b. Credit Risk (Contd.) ii. Financial assets that are either past due or impaired As at the reporting date, there are no financial assets that are either past due or impaired. c. Liquidity Risk Liquidity risk is defined as the risk that the Fund will encounter difficulty in meeting obligations associated with financial liabilities that are to be settled by delivering cash or another financial asset. Exposure to liquidity risk arises because of the possibility that the Fund could be required to pay its liabilities or cancel its units earlier than expected. The Fund is exposed to cash cancellation of its units on a regular basis. Units sold to unitholders by the Manager are cancellable at the unitholder s option based on the Fund s NAV per unit at the time of cancellation calculated in accordance with the Deed. Unit trust funds with principal investment strategies that involve foreign securities, derivatives or securities with substantial market and/or credit risk tend to have the greatest exposure to liquidity risks. NNGEO s investment manager manages the risk by adopting NN s diversification policy that stipulates single and group issuer limits to confine overexposure to a single company or group of companies. The following table analyses the maturity profile of the Fund s financial assets and financial liabilities in order to provide a complete view of the Fund s contractual commitments and liquidity. Note Up to 1 year Assets Financial assets at FVTPL 1,489, ,669 Other assets 70,288 42,803 (i) 1,559, ,472 Liabilities Other liabilities (ii) 15,216 16,456 Equity (iii) 1,544, ,016 Liquidity gap - - (i) Financial assets Analysis of financial assets into maturity groupings is based on the expected date on which these assets will be realised. The Fund s investments in a foreign collective investment scheme have been included in the up to 1 year category on the assumption that these are highly liquid investments which can be realised should all of the Fund s unitholders equity be required to be redeemed. For other assets, the analysis into maturity groupings is based on the remaining period from the end of the reporting period to the contractual maturity date or if earlier, the expected date on which the assets will be realised. Kenanga Global Opportunities Fund Interim Report 17

23 2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.) c. Liquidity Risk (Contd.) (ii) Financial liabilities The maturity grouping is based on the remaining period from the end of the reporting period to the contractual maturity date or if earlier, the date on which liabilities will be settled. When the counterparty has a choice of when the amount is paid, the liability is allocated to the earliest period in which the Fund can be required to pay. (iii) Equity As unitholders can request for redemption of their units, they have been categorised as having a maturity of up to 1 year. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Basis of Accounting The financial statements of the Fund have been prepared in accordance with Malaysian Financial Reporting Standards ( MFRS ) as issued by Malaysian Accounting Standards Board ( MASB ) and International Financial Reporting Standards ( IFRS ) issued by International Accounting Standards Board ( IASB ). The accounting policies adopted are consistent with those of the previous financial period except for the adoption of the new and amended MFRS and Interpretation Committee ("IC") interpretations which became effective for the Fund on 1 March The adoption of the new and amended MFRS and IC interpretations did not have any significant impact on the financial position or performance of the Fund. The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below. b. Standard, Amendments and Interpretations Issued But Not Yet Effective As at the date of authorisation of these financial statements, the following Standards, Amendments and Interpretations that have been issued by MASB will be effective for the Fund in future periods. The Fund intends to adopt the relevant standards when they become effective. Description Effective for financial period beginning on or after Amendments to MFRS contained in the documents entitled Annual Improvements to MFRS cycle 1 January 2016 MFRS 14: Regulatory Deferral Accounts 1 January 2016 Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the Consolidation Exception 1 January 2016 Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 1 January 2016 Amendments to MFRS 11: Accounting for Acquisitions of Interests in Joint Operations 1 January 2016 Amendments to MFRS 101: Disclosure Initiatives 1 January 2016 Kenanga Global Opportunities Fund Interim Report 18

24 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) b. Standard, Amendments and Interpretations Issued But Not Yet Effective (Contd.) Description Effective for financial period beginning on or after Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation 1 January 2016 Amendments to MFRS 116 and MFRS 141: Agriculture: Bearer Plants 1 January 2016 Amendments to MFRS 127: Equity Method in Separate Financial Statements 1 January 2016 MFRS 15 Revenue from Contracts with Customers 1 January 2018 MFRS 9: Financial Instruments (IFRS 9 Financial Instruments as issued by IASB in July 2014) 1 January 2018 The Fund will adopt the above pronouncements when they become effective in the respective financial periods. These pronouncements are not expected to have any significant impact to the financial statements of the Fund upon their initial application, other than MFRS 9. MFRS 9 replaces MFRS 139 on the following requirements: classification and measurement of financial assets and financial liabilities as defined in MFRS 139, impairment methodology and hedge accounting. The Fund is in the process of making an assessment of the impact of this Standard. c. Financial Assets Financial assets are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at FVTPL, directly attributable transaction costs. The Fund determines the classification of its financial assets at initial recognition. i. Financial assets at FVTPL Financial assets are classified as financial assets at FVTPL if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading include foreign collective investment scheme acquired principally for the purpose of selling in the near term. Subsequent to initial recognition, financial assets at FVTPL are measured at fair value. Changes in the fair value of those financial instruments are recorded in profit or loss. Interest earned elements of such instruments are recorded in interest income. Exchange differences on financial assets at FVTPL are not recognised in profit or loss but are included in net gain or net loss on changes in fair value of financial assets at FVTPL. Kenanga Global Opportunities Fund Interim Report 19

25 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) c. Financial Assets (Contd.) ii. Receivables Financial assets with fixed or determinable payments that are not quoted in an active market are classified as receivables. Subsequent to initial recognition, receivables are measured at amortised cost using the effective interest method. Gain or loss is recognised in profit or loss when the receivable is derecognised or impaired, and through the amortisation process. A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received is recognised in profit or loss. d. Impairment of Financial Assets The Fund assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Fund considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. If any such evidence exists, the amount of impairment loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the financial asset s original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets, with the exception of receivables, where the carrying amount is reduced through the use of an allowance account. When a receivable becomes uncollectible, it is written off against the allowance account. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the assets does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss. e. Income Income is recognised to the extent that it is probable that the economic benefits will flow to the Fund and the income can be reliably measured. Income is measured at the fair value of consideration received or receivable. Interest income is recognised using the effective interest method. The realised gain or loss on sale of investments is measured as the difference between the net disposal proceeds and the cost of the investment. The unrealised gain or loss on change in value of investments is measured as the difference between the fair value and the cost of the investment, calculated on a daily basis. Kenanga Global Opportunities Fund Interim Report 20

26 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) f. Cash and Cash Equivalents For the purposes of the statement of cash flows, cash and cash equivalents include cash at bank and short term deposits with licensed financial institutions. g. Income Tax Income tax on the profit or loss for the financial period comprises current tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the financial period. As no temporary differences have been identified, no deferred tax has been recognised. h. Unrealised Reserves Unrealised reserves represent the net gain or loss arising from carrying investments at their fair values and unrealised gain or loss from translating foreign currency monetary items at exchange rates prevailing at reporting date. This reserve is not distributable. i. Financial Liabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument. The Fund s financial liabilities are classified as other financial liabilities. The Fund s financial liabilities are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. A financial liability is derecognised when the obligation under the liability is extinguished. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. j. Unitholders Contribution NAV Attributable to Unitholders The unitholders contribution to the Fund is classified as equity instruments. Distribution equalisation represents the average amount of undistributed net income included in the creation or cancellation price of units. This amount is either refunded to unitholders by way of distribution and/or adjusted accordingly when units are released back to the Trustee. Kenanga Global Opportunities Fund Interim Report 21

27 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.) k. Foreign Currency i. Functional and presentation currency The financial statements of the Fund are measured using the currency of the primary economic environment in which the Fund operates ( the functional currency ). The financial statements are presented in Ringgit Malaysia (), which is also the Fund s functional currency. ii. Foreign currency transactions l. Distribution In preparing the financial statements of the Fund, transactions in currencies other than the Fund s functional currency (foreign currencies) are recorded in the functional currency using exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are translated at the rates prevailing on the reporting date. All exchange gain or loss is recognised in profit of loss. Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in statement of comprehensive income for the period. The principal exchange rate for each respective units of foreign currency ruling at statement of financial position date is as follows: EUR Distributions are at the discretion of the Manager. A distribution to the Fund s unitholders is accounted for as a deduction from retained earnings. m. Significant Accounting Judgments and Estimates The preparation of financial statements requires the use of certain accounting estimates and exercise of judgment. Estimates and judgments are continually evaluated and are based on past experience, reasonable expectations of future events and other factors. i. Critical judgments made in applying accounting policies There are no major judgments made by the Manager in applying the Fund's accounting policies. ii. Key sources of estimation uncertainty There are no key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date. Kenanga Global Opportunities Fund Interim Report 22

28 4. FINANCIAL ASSETS AT FVTPL Financial assets held for trading, at FVTPL: Collective investment scheme - foreign 1,489, , to to Net gain on financial assets at FVTPL comprised: Realised gain on disposals 2,108 4,107 Unrealised changes in fair values 78, ,298 4,146 Details of financial assets at FVTPL as at 31 August 2015: Quantity Cost Fair value Percentage of NAV % NNGEO 847 1,489,123 1,385, Total financial assets at FVTPL 1,489,123 1,385, Unrealised gain on financial assets at FVTPL 103, MANAGER S FEE The Manager s fee is computed based on 1.80% per annum of the NAV of the Fund, calculated on a daily basis, as provided under Division 13.1 of the Deed. The Manager is currently charging Manager s fee of 1.80% per annum (financial period from 1 March 2014 to 31 August 2014:1.80% per annum) of the NAV of the Fund. As the Fund invests in units of NNGEO, 1.50% of the manager s fee is charged by NNGEO s manager, NNIP, and the remaining of 0.30% is charged by the Manager. Accordingly, there is no double charging of manager s fee. 6. TRUSTEE S FEE Pursuant to Second Supplemental Deed dated 25 July 2014, the Trustee's fee is computed at a rate not exceeding 0.08% per annual of the NAV of the Fund and subject to a minimum fee of 9,000 per annum effective from 1 August Prior to 1 August 2014, the Trustee's fee was computed at a rate not exceeding 0.08% per annum of the NAV of the Fund and subject to a minimum fee of 18,000 per annum per Fund. Accordingly, the Trustee s fee is computed based on a minimum fee of 9,000 per annum from 1 August Prior to 1 August 2014, the trustee's fee was computed based on the minimum fee of 18,000 per annum. Kenanga Global Opportunities Fund Interim Report 23

29 7. INCOME TAX Income tax is calculated at the Malaysian statutory tax rate of 25% of the estimated assessable income for the financial period. The statutory tax rate will be reduced to 24% effective year of assessment Income tax is calculated on investment income less partial deduction for permitted expenses as provided for under Section 63B of the Income Tax Act, A reconciliation of income tax expense applicable to net income/(loss) before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Fund is as follows: to to Net income/(loss) before tax 68,766 (12,284) Tax at Malaysian statutory tax rate of 25% (financial period from 1 March 2014 to 31 August 2014: 25%) 17,192 (3,071) Tax effect of: Income not subject to tax (20,126) (1,046) Expenses not deductible for tax purposes 1,904 2,709 Restriction on tax deductible expenses for unit trust fund 1,030 1,408 Income tax for the period OTHER PAYABLES Accrual for auditors remuneration 2,244 3,164 Accrual for tax agent s fees 5,845 4,500 Provision for printing and other expenses 5,243 6,373 13,332 14, NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS NAV attributed to unitholders is represented by: Note Unitholders contribution (a) 1,554, ,622 Accumulated losses: Realised reserves (114,520) (65,462) Unrealised reserves 103,897 22,856 (10,623) (42,606) 1,544, ,016 Kenanga Global Opportunities Fund Interim Report 24

30 9. NET ASSET VALUE ATTRIBUTABLE TO UNITHOLDERS (CONTD.) (a) Unitholders contribution to to No. of units No. of units At beginning of the period 871, ,766 1,957,192 1,175,626 Add: Creation of units 1,979,598 1,059,138 28,002 15,892 Less: Cancellation of units (78,309) (41,269) (913,433) (531,896) Distribution equalisation At end of the period 2,773,154 1,554,818 1,071, ,622 The number of units legally or beneficially held by the Manager, Kenanga Investors Berhad and parties related to the Manager as at 31 August 2015 were nil (31 August 2014: nil). 10. PORTFOLIO TURNOVER RATIO ("PTR") PTR for the financial period from 1 March 2015 to 31 August 2015 is 0.51 times (financial period from 1 March 2014 to 31 August 2014: 0.50 times). PTR is the ratio of average of the acquisitions and disposals of investments of the Fund for the year to the average NAV of the Fund, calculated on a daily basis. 11. MANAGEMENT EXPENSE RATIO ("MER") MER for the financial period from 1 March 2015 to 31 August 2015 is 1.15% (financial period from 1 March 2014 to 31 August 2014: 2.44%). MER is the ratio of total fees and recovered expenses of the Fund expressed as a percentage of the Fund s average NAV, calculated on a daily basis. 12. TRANSACTIONS WITH TARGET FUND MANAGER Percentage of Transaction value total % NNIP* 1,040, * As the Fund is in its nature a feeder fund to a global fund, NNGEO, hence all transactions were made with the global fund manager, NNIP. The above transaction values are in respect of investments in foreign collective investment scheme. Transactions in this security do not involve any commission or brokerage fees. 13. SEGMENTAL REPORTING As stated in Note 1 to the financial statements, the Fund is a feeder fund whereby at least 95% of the Funds NAV will be invested in NNGEO while maintaining up to a maximum of 2% of the Fund s NAV in liquid assets. NNGEO is an open ended unit trust fund in Luxembourg and is managed by NNIP. As the Fund is by nature a feeder fund to an underlying fund, business or geographical segments is not relevant. Kenanga Global Opportunities Fund Interim Report 25

31 14. FINANCIAL INSTRUMENTS a. Classification of financial instruments The Fund s financial assets and financial liabilities are measured on an ongoing basis at either fair value or at amortised cost based on their respective classification. The significant accounting policies in Note 3 describe how the classes of financial instruments are measured, and how income and expenses, including fair value gains and losses, are recognised. The following table analyses the financial assets and liabilities of the Fund in the statement of financial position by the class of financial instrument to which they are assigned and therefore by the measurement basis. Financial assets at FVTPL Receivables Financial liabilities Total Assets Collective investment scheme - foreign 1,489, ,489,123 Cash at bank - 70,288-70,288 1,489,123 70,288-1,559,411 Liabilities Amount due to Manager Amount due to Trustee - - 1,455 1,455 Other payables ,332 13, ,216 15, Assets Collective investment scheme - foreign 590, ,669 Cash at bank - 42,803-42, ,669 42, ,472 Liabilities Amount due to Manager Amount due to Trustee - - 2,244 2,244 Other payables ,037 14, ,456 16,456 Kenanga Global Opportunities Fund Interim Report 26